How is average variable cost calculated? If a firm has total variable costs of $19,200 when producing 575 units, what is the firm's average variable cost?
What will be an ideal response?
Average variable cost is calculated by dividing total variable cost by the number of units of output. Therefore, the firm's average variable cost is equal to $19,200/575 which is equal to $33.39 .
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Dell and Gateway must decide whether to lower their prices, based on the potential economic profits shown in the payoff matrix above. (The profits are in millions of dollars). In the Nash equilibrium
A) Dell keeps its prices high and Gateway lowers its prices. B) both Dell and Gateway lower prices. C) Gateway keeps its prices high and Dell lowers its prices. D) both Dell and Gateway keep prices high.
The total value to society of having garbage removed is greater than the value of baseball games. Why, then, are baseball players paid more than garbage collectors?
A) Garbage removal results in significant external benefits that are not captured in the price paid for garbage removal. As a result, wages of garbage collectors do not reflect their social benefits. B) There is greater competition in the garbage collection industry than there is in Major League Baseball. C) Wages do not depend on total values but marginal values. The marginal revenue product of baseball players exceeds the marginal revenue product of garbage collectors. D) Although the total value of garbage removal is greater than the total value of baseball, wages are determined by average values.